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On the inside, firms are usually set up as something like communist autocracies (formally everyone subordinate to the CEO, no internal prices, budgets set by fi
by fiatmoney 12y ago
On the inside, firms are usually set up as something like communist autocracies (formally everyone subordinate to the CEO, no internal prices, budgets set by fiat, etc). This has the advantage of reducing transaction costs (which in classical theory of the firm, is why they exist in the first place) but results in some of the same pathologies.
- TheOtherHobbes 12y agoIncluding a Cult of Personality, in too many cases. Even if it's not always wreathed around individuals, the role has been mythologized to an unhealthy, even a ridiculous extent which has allowed many CEOs to ignore consequences and accountability. But my suspicion is that in the general case, all systems tend towards aristocracy and oligarchy, no matter how they dress on the outside, and that every system evolves its own Theory of Social Privilege to legitimise and promote certain kinds of relationships and transactions and prevent others.
- rhizome 12y agoIndeed, we see entire industries rewarding failure.
- nhaehnle 12y ago> communist autocracies That's a pretty crazy misuse of the term "communist". Just say "autocracies", the inside setup of typical firms really has nothing to do whatsoever with communism.
- fiatmoney 12y agoResource allocations are set by fiat and there are no price signals or "private property" per se (the accounting department doesn't "own" their computers, they're allocated them, and if that department is outsourced they'll be allocated to someone else). Departments don't technically control their own investments; any revenues they bring in are the company's as a whole and redistributed as they see fit. Seems apt to me; what would you call it?